If you go to Forbes page and take a look at the top richest people in the world, you will
be shocked by the size of their wealth.
But none of their wealth could possibly come close to John Rockefeller's one.
His wealth was so significant that he was wealthier than Jeff Bezos, bill gates, Warren
Buffett, Mark Zuckerberg and Elon Musk combined.
John Rockefeller was the richest American to ever live with an estimated wealth of 400
billion dollars.
So, today we will take a look at how exactly he made that fortune.
But first, let's take a look at how he got into business in the first place.
He grew up in a large and controversial family, with a con man father and an extremely religious
mother, he was so desperate to take care of his mom that he got a job as a bookkeeper
at the age of 16.
This job played an essential role in his life.
In fact, it was so vital that he later ascribed all of his success to his first job, because
there he learned how business works, from negotiating to collecting debts.
And his goal was to make a hundred thousand dollars (2.63 million) and live a hundred
years.
By the age of 19, he already mastered the game and decided to start his own business
and began selling everything he possibly could from meat to grains and got a commission on
every deal.
Although that he was doing pretty good, his business only soared with the outbreak of
the civil war because the demand for food only increased.
But his ambitions were more significant than that, with the discovery of oil in 1859 (Titusville,
Pennsylvania.)
He realized the potential opportunity.
Of course, oil wasn’t such a big deal then as it as today, since cars and planes weren’t
yet invented, but it still could be used to produce kerosene which was widely used to
warm up homes and light up lumps.
While most people risked their lives to find where oil could be extracted, John had a deeper
understanding of the business.
He realized that oil by itself wasn't useful, it could only be used after its refined, so
he built his first refinery in 1963.
Since the industry was still at its initial phase, most refiners could only turn 60% of
the oil to kerosine while dumping the rest into rivers.
It was clearly a waste of resources for John, so he operated at a higher efficiency.
In fact, he was so eager to be ahead of the competition that he did everything possible
to lower the cost at every stage of the production.
And in less than 2 years, the business was worth over a million dollar, adjusted to inflation(
72 500 at its time).
By 1970, there were too big for a partnership, so he incorporated it into Standard Oil of
Ohio.
With its massive size and tremendous resources, the company started growing at an incredible
speed.
He would buy the least efficient competing refineries, throw money into it to improve
their efficiency, use his power and network to get the highest possible discounts on oil
shipments and get rid of his competitors.
Those who refused to sell (competing refiners), John threatened to start a price war until
they would run of cash and go bankrupt and then he would buy their assets cheaply at
an auction.
That's how he took control of the entire industry (90%).
Rockefeller realized that pipelines can easily replace the railroads to transport oil, so
he began to built and acquire them.
The railroads saw that as a threat that standard oil will take over the transportation industry
as well.
At this point, Rockefeller was so big that there were many journalists, politicians and
other businessmen who attacked him to bring him down.
Even the Congress saw him as a threat.
Although that he broke down the company into 41 entities under the banner of Standard Oil
Trust.
It didn't save him, and by 1911, The US supreme justice department found Standard Oil guilty
in violation of antitrust act ( Sherman Antitrust Act) and broke it down in 34 different companies.
While John still kept his share.
It might seem like it was a disaster for him, but it turned out to be immensely profitable.
Each of these companies individually were worth more which further increased Rockefella’s
net worth to 400 billion dollars.
Over time these companies either worked together or simply merged such as Chevron or Exxon
Mobil who are still leading the industry today.
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